Wednesday, May 25, 2005

Highlights From Goldman Sachs Market Data Conference

I recently chaired a panel of market data experts at THEMEdia 2005 conference held by Goldman Sachs in London. The panel included Julie Holland, global head of Research & Asset Management at Reuters; Mark Hepsworth, managing director of Interactive Data Corporation's ComStock Europe; Hardeep Rai, executive committee member of the Information Providers User Group (IPUG); and Donal Smith, chief operating officer of Thomson Financial Europe. (The panelists were assured their individual remarks were off the record.)

In an informal and non-scientific poll at the beginning of the session, audience members were asked to give their estimates of annual revenue growth for the vendors over the next three years. The consensus was zero to down four percent. At the end of the panel, the same question was asked and the consensus declined to zero to down two percent.

My Shore Communications 2005 forecast calls for estimated revenues of $7.105 billion, a .06 percent increase from $7.060 billion in 2003. The 2004 revenue total was up three percent from $6.860 billion in 2003. For details on the 2005 forecast, contact me at jackmc@shore.com.

The Goldman Sachs panel was asked about their customers' current spending habits. One said customers were still looking to eliminate multiple and overlapping vendors. Spending on transaction services also has improved. Another said cost cutting is still very much a priority, as is spending on program trading improvements. Several said that spending to meet regulatory requirements is increasing. Spending by hedge funds continues to move higher but at a slower rate. Automated trading and algorithmic trading needs are getting more customer attention these days. One panelist said that with the 2004 Global Research Analyst Settlement in the US, there will be more of a shift from sell side research to buy side research, which will require more investments by the buy side. Bottom line? Cost cutting is still dictating spending patterns.

The panel was asked about why Bloomberg, after a well publicized entrance into the foreign exchange market two years ago, has made no headway against Reuters. One of the axioms in the market data space is that the first there tends to remain first, something that seems to be working out here. One panelist said the deal Bloomberg did with EBS to bolster its foreign exchange presence was not the answer. But, another panelist said the Bloomberg/EBS service is takings some traction and that Reuters is losing some terminals to Bloomberg. In my mind, it's clear that Reuters is still ruling the foreign exchange roost, and, if anything, is improving its share of market over Bloomberg in foreign exchange.
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